AT&T Blames FCC For T-Mobile Lay Offs

3/26/2012 11:13 AM ET

AT&T Inc. (T) has blamed the recent job layoffs announced by T-Mobile USA on the Federal Communications Commission's rejection of the proposed merger deal between the two companies last year. T-Mobile USA is the wireless operation of Deutsche Telekom AG (DTEGY.PK).

Jim Cicconi, AT&T Senior Executive Vice President of External and Legislative Affairs said on Friday in a blog posting on the company's website that normally, AT&T would not have commented on another company's layoffs.

"But I feel this is an exception for one big reason - only a few months ago AT&T promised to preserve these very same call centers and jobs if our merger was approved. We also predicted that if the merger failed, T-Mobile would be forced into major layoffs," Cicconi said.

T-Mobile USA announced last Thursday that it will close seven call centers in the U.S. over the next three months, resulting in a net reduction of 1,900 jobs. The move will reduce the company's call center operations to 17 by the end of June, from the current 24.

T-Mobile USA also said it will restructure and optimize operations in other parts of the business, which will take place by the end of the second quarter of 2012.

AT&T, the second largest wireless operator in the U.S., said in March 2011 that it agreed to acquire T-Mobile USA from Deutsche Telekom for about $39 billion in cash and stock.

However, the Justice Department sued to block the merger in August, alleging the merger would curb competition for mobile wireless services, raise prices, lower the quality of services, and stifle innovation.

The merger was given another blow in November when the FCC opposed the deal. The regulatory agency released a report that showed the deal would not only kill wireless competition in 99 of the 100 largest markets in the U.S., but also destroy jobs.

The report also rubbished AT&T's claims that the deal would lead to job creation and that customers would benefit from its latest 4G LTE technology.

Cicconi said in his blog that the call centers now being closed would have stayed open, but for the government's decision.

He noted that when the FCC ventures far afield from technical issues, and into judgments about employment or predictions about business decisions, it has often been "wildly wrong".

"One must approach them not as an exercise of power but instead of responsibility, because, as I learned in my years of public service, the price of a bad decision is too often paid by someone else," he said.

However, the FCC has reportedly hit back at AT&T. According to media reports, the regulatory agency noted that AT&T's own confidential documents showed the merger would have resulted in significant job losses.

In Monday's session, T is trading at $31.80, up $0.27 or 0.87 percent 3.44 million shares.